Cash machines are dying, and it’s not all down to debit cards

Why not turn an old cardboard box "into a cash machine with buttons and pretend screen for lots of pretend play with money"? That's one of the suggestions listed in a press release from BMO Global Asset Management on the matter of how to keep your children entertained over half term. There are various other unattractive ideas (bury money in mud for the kids to dig up ). But this is by far the most useless.

Why? Two reasons. First cash machines are a dying breed. As we use debit cards and in particular contactless more and more, demand falls. And as demand falls (cash machine usage has been falling at a rate of about 6% a year), it makes sense (to the operators) at least to cut back on the number of machines. The number available is now falling by around 500 a month (and rising), something exacerbated by a fall in the fee providers receive per withdrawal.

Those cash machines that remain often charge for use. In Great Yarmouth, for example, half of the remaining cashpoints charge a fee (up to £2 a go). And in many other (mostly poor) areas, there were falls in the number of free-to-use machines of 30%-plus in 2018. Residents in 153 UK postal codes have no access to a free machine (they have to travel at least a kilometre to get to one).

Look at the new world of cash machines like this and the truth is that if you wanted your kids to play cashpoints in a way that might help them as adults, you'd have to make the them take two buses, walk two miles and then hand over £1.50 just to be allowed to use the thing in the first place.

The second reason is about very low and negative interest rates in our new world of no returns on deposits isn't everyone going to keep more cash at home? And, if so, who needs cashpoints? Because in the world of negative interest rates we are heading for, everyone is going to keep their cash at home. People in the US, Europe and Japan are "hoarding physical cash like never before" says Bloomberg.

In the US currency in circulation stood at about 5.6% of GDP in 2008. It is now 8.2% - "close to the highest level in 36 years." And that cash looks to be being used not so much as something to use to exchange value, but as an actual as a store of value the number of $100 bills held is up, for example. And why not? If you don't much trust the banks and they aren't paying you interest anyway, why let them look after your cash.

I have an idea for a more realistic half term game. How about burying Mummy's money under the mattress while she shops online for a safe?